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Japan ratifies US trade deal in record time

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Via Financial Times

Japan’s Diet has pushed through a US trade deal in record time, showing how Tokyo hopes to dodge any trade war by co-operating with US President Donald Trump’s demands.

The upper house completed ratification of the deal — which will slash Japanese tariffs on US beef — 10 weeks after it was first agreed and less than nine months since the start of negotiations. With no ratification needed in the US, the deal is set to come into effect on January 1. 

The deal will give Mr Trump a victory to tout at the start of a presidential election year. It highlights the contrast between countries that have negotiated quick agreements with the US president and those in protracted stand-offs, such as China and the EU. 

Mr Trump has this week proposed the imposition of 100 per cent tariffs on up to $2.4bn of French goods, including champagne, and restored tariffs on metals from Argentina and Brazil to punish them for their currency policies. 

Japan’s new deal will be an important test of Mr Trump’s approach to trade. If he makes no further demands on Tokyo, it may encourage other countries to strike similar deals, but if he targets Japan again they may conclude there is nothing to gain from making concessions.

The hasty negotiation and passage of the deal, when most free trade agreements take years, reflects the priority Japanese Prime Minister Shinzo Abe puts on his relationship with Mr Trump. Officials cleared the relevant Diet committees of other business to push through the US-Japan deal. 

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Opposition parties attacked the agreement. “Japan has been defeated,” said independent member of parliament Yoichi Iha, who described the deal as “an unequal treaty for the Reiwa era”. Western countries imposed so-called unequal treaties on Asia in the 19th century; the Reiwa era is the reign of Japan’s new emperor. 

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Under the deal, Japan will cut its tariffs on US beef and pork to the same levels as in the Trans-Pacific Partnership, another trade deal from which Mr Trump withdrew as one of his first acts as president. That will mean US farmers are no longer disadvantaged relative to Canadian or Australian competitors, helping Mr Trump placate rural voters who have lost out from his trade war with China. 

In return, Japan won cuts in US tariffs on certain manufactured goods, such as machine tools and musical instruments, but nothing in the prized automobile or auto-parts sectors. There is also a separate agreement between the countries on digital trade. 

In a recent interview with the Financial Times, chief negotiator and now foreign minister Toshimitsu Motegi insisted Japan had got a good deal, with “unusually clear” assurances that it will not face any new tariffs on its automobile exports to the US. 

The deal will mean Japan has free trade agreements in place covering more than half of its total trade. However, Japan hopes that the US will one day return to the more comprehensive TPP agreement.

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